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Business Resilience Series – Webinar 2

Apr 17, 2020

The second installment of the Business Resilience Series provided a comprehensive review of the Canada Emergency Wage Subsidy and explored the newly announced Saskatchewan Small Business Emergency Payment Program.

The expert panel tackled a wide range of questions from how to approach your commercial landlord to seek lease payment relief to the consequences of restricted court operations on small businesses engaged in legal matters. The second session built on many of the issues introduced in the first installment with a greater depth of analysis and the unfiltered perspectives of the panel.

Here are some of the takeaways from this week’s webinar:

The Canada Emergency Wage Subsidy

CRA appears to be rolling out programs like the CERB reasonably quickly, which the panel believes bodes well for business supports like the 75% wage subsidy. As of this week, it appears that the subsidy applies to both current and new staff, so the panel suggests business rehire any staff for whom the subsidy makes more sense than simply collecting the $2,000 per month CERB.

The subsidy is slightly more ambiguous for business owners, who at this point cannot collect it unless they are on their own payroll. In other words, the wage subsidy does not apply to dividends, contract work, or other income sources that are not delivered through a registered payroll system.

Additional Business Support Programs

This week, the Government of Saskatchewan announced the Saskatchewan Small Business Emergency Payment Program for small businesses in the province that have been ordered to temporarily close or significantly curtail operations during the public emergency period due to a public health order to help control transmission of COVID-19. The program provides a grant of up to $5,000 for small businesses based on 15% of a business's monthly sales revenue in either April 2019 or February 2020.

Additionally, the Canadian Emergency Business Account program opened late last week. The program, which is delivered through your regular financial institution, provides interest-free loans of up to $40,000 – $10,000 of which will be forgiven as a grant if the loan is repaid by the end of the year. Business owners must provide their financial institution with their T4 Summary to apply and can expect to receive their CEBA funds within five business days.

Tax and Eligibility Implications

The panel noted that, as with many of federal programs, the goal seems to be to roll them out as quickly as possible and establish eligibility after the fact. As such, businesses can expect their applications to be accepted quickly, but should ensure they do in fact qualify before applying.

Virtus Group’s Craig Reed also suggests businesses potentially move to a cash-based accounting as opposed to an accrual method, allowing them to avoid including unreceived revenue for services rendered (from other businesses who cannot afford to pay, for example) in order to reduce their reported revenue, making it easier to quality for business support programs.

Businesses should also ensure they understand the purpose of these subsidies. For example, the CEBA is only meant to be used for operating costs to cover necessary payments. Ascent’s Jeff Boutilier recommends business owners use a spreadsheet to keep track how federal supports are being used in case they need to demonstrate this in later months.

Craig Reed also reminds anyone accepting payments or subsidies that they are considered taxable income. As such, it is important the business owners and individuals alike have a plan for paying tax on these funds at the end of the year, as taxes and deductions have not been removed.

For more information, watch the Q&A section of the webinar (1:10:40 - 2:00:00).

Communication is Key

Mitch Molnar and Pamela Meger both reiterated the importance of open and timely communication, both with commercial landlords and creditors alike. Molnar reiterated that many landlords do not know their tenants’ businesses and may be unaware of their ability to operate and pay their rent. He suggested that most landlords have no interest in losing tenants in these uncertain times and will most likely be willing to work with tenants to develop a plan for deferring or amortizing missed rent over the remainder of your lease. Meger echoed this sentiment, reminding business owners that the earlier they begin to work with creditors the more options they are likely to have.

For more information, watch the Q&A section of the webinar (1:10:40 - 2:00:00).

Overall the panel agreed that this ordeal seems to be raising awareness among the public and the government of the impact small businesses have on our economy and our lives – which is a definite positive.